NBFC cannot lend more than Rs one crore for IPO

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Mumbai; Non-banking finance companies (NBFCs) will not be able to lend more than Rs 1 crore to investors looking to buy shares through initial public offerings (IPOs) from next financial year.

The RBI's decision comes as part of reducing risks to the country's financial system. Financing to apply for an IPO will have a limit of Rs 1 crore per borrower, the RBI said. This standard will be applicable from April next financial year.

Due to this standard, High Net Worth Investors (HNIs) will have less money on hand to apply for an IPO, not to mention the excessive subscriptions in the HNI category.

In the current year, there has been an increase in the attraction of investors in the primary market as well as behind the secondary market in the country. The influx of investors in the primary market has also resulted in higher quotes at the time of listing.

The current year has seen companies raise huge sums of money through IPOs and investors have also seen a surge in IPOs. However, the benchmark index of the stock market has dropped significantly from its all-time high in the current week. In the coming days, six companies are bringing in IPOs to raise Rs 20,000 crore from the market.

The Securities and Exchange Board of India (SEBI) has recently given green light to FSN e-commerce ventures, PB Fintech, etc. for their IPOs. Apart from this, some other well-known companies like LIC are also preparing for IPOs.


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